CVC Issues Consolidated Master Circular on Vigilance Administration for PSBs, Insurance Companies and Financial Institutions

The Central Vigilance Commission (CVC) has issued Master Circular No. 07/MC/2026 consolidating and updating all its earlier guidelines relating to vigilance administration in Public Sector Banks (PSBs), Public Sector Insurance Companies (PSICs) and Public Sector Financial Institutions (PSFIs). The circular comes into effect immediately and supersedes all previous CVC instructions on the subject.

The consolidated circular aims to provide a single reference document for vigilance administration, bringing greater clarity and uniformity in handling vigilance matters across these organisations.

Key Highlights

• Single consolidated framework: All earlier circulars, office orders and guidelines relating to vigilance administration in PSBs, PSICs and PSFIs have been merged into one master circular.
• Clear guidance on vigilance angle: The circular explains circumstances in which misconduct or irregularities may constitute a vigilance angle. These include corruption, abuse of official position, fraudulent transactions, falsification of records, misappropriation of assets, disclosure of confidential information and other serious lapses affecting organisational integrity.
• Role of Internal Advisory Committees (IACs): Every PSB, PSIC and PSFI is required to have a three-member Internal Advisory Committee to examine investigated cases and recommend whether a vigilance angle exists before they are processed further.
• Enhanced role of Chief Vigilance Officers (CVOs): CVOs have been entrusted with examining vigilance cases, reviewing staff accountability, scrutinising fraud-related reports and forwarding appropriate recommendations to disciplinary authorities and the Commission wherever required.
• Focus on preventive vigilance: The circular stresses strengthening internal controls through updated policies, plugging systemic loopholes, monitoring discretionary powers, improving cyber and data security awareness, and building institutional capacity to prevent fraud and misconduct.
• Regional Rural Banks: Sponsoring Public Sector Banks have been directed to strengthen vigilance mechanisms in Regional Rural Banks through dedicated vigilance cells, complaint handling systems, whistleblower policies, periodic reporting and training.
• Fraud reporting: Cases involving frauds above the prescribed threshold and having a vigilance angle are to be reported to the Commission in accordance with the prescribed reporting mechanism and timelines.
• Rotation of officials: Organisations have been instructed to identify sensitive posts and ensure periodic rotational transfer of officials serving in such positions in line with existing CVC guidelines.
• Referral to ABBFF: Fraud cases involving ₹3 crore and above in PSBs, PSICs and PSFIs are to be referred to the Advisory Board for Banking and Financial Frauds (ABBFF) for examination and recommendations.

Objective of the Circular

The Commission has clarified that the objective of vigilance administration is not to discourage bona fide commercial decisions, but to improve transparency, accountability and managerial efficiency. The circular distinguishes genuine business decisions taken in good faith from actions involving corruption, abuse of authority or deliberate misconduct, ensuring that vigilance mechanisms support sound governance rather than impede legitimate decision-making.

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